Mortgage Connect noncompete ruled unenforceable in PA

"Judge McGinley deemed the noncompete contracts one-year duration reasonable but struck down its nationwide geographic scope, which would have restricted Harvey from virtually any activity in the mortgage industry. “The restriction prevents Harvey from working anywhere in the United States in the industry that has been her livelihood for her working life,” McGinley wrote."

"Regarding confidentiality, the judge noted that Harvey returned all Mortgage Connect documents and devices upon her departure, with no evidence that she retained, misused or shared proprietary information. Furthermore, Harvey did not create Mortgage Connect's proprietary software (E-Connect) and lost access to it when she resigned."

"The court also found no breach of customer nonsolicitation clauses. Harvey's role was deemed operational, not client-facing. In the mortgage services industry, customers are not exclusive; the customer base is largely known throughout the industry or is otherwise readily identifiable through public sources, the judge noted, adding that no other Mortgage Connect employees left for First Title."

"In light of the case, the FTC urged Mortgage Connect to review and potentially discontinue restrictive covenants that may violate federal antitrust laws. Mortgage Connect may have broadly deployed unjustifiable noncompete agreements in employment contracts with potential adverse effects on workers and competition, Ferguson said in a statement."

Mortgage Connect sought to enforce a confidentiality agreement signed in August 2022 by Melissa Harvey, a former senior vice president who left in May 2025 to join First Title. The court found the one-year duration of the noncompete reasonable but invalidated its nationwide geographic scope, preventing Harvey from working anywhere in the United States in the mortgage industry. The court noted Harvey returned all company documents and devices and there was no evidence she retained, misused, or shared proprietary information. The court also found no breach of customer nonsolicitation clauses because her role was operational rather than client-facing. The court reasoned that mortgage customers are not exclusive and are generally known or identifiable through public sources. The FTC urged Mortgage Connect to review and potentially discontinue restrictive covenants that may violate federal antitrust laws.

Read at www.housingwire.com